The recent depreciation of the rupee against the dollar is attributed to India’s widening current account deficit and reduced capital inflows. It is critical to implement policies that reduce the twin deficits. That will boost investor confidence and bring in capital inflows.

The onus of recommending the right product should be on the advisor who should earn the trail commission, while the agent earns a small token commission for his limited role.  As an extension of this principle, the exit load currently charged to the investor can also be collected from the advisor. 

Reputational capital in advisory business can be built only when assets under advice are evaluated by investors for performance.  This can be fostered only if advisors are able to earn a variable fee for their services. Such variable fees currently go to the distributor.

A financial advisor  provides strategic and tactical advice to a household to manage its balance sheet efficiently. This function cannot be oversimplified to mean distribution of financial products, financial planning or risk profiling. The distinction between the advisor and the distributing agent is critical to avoid malpractices in the mutual fund distribution space.